GE's CIO Will Help Drive $15 Billion In Technology Based Revenue By 2020

When Jim Fowler was promoted to become the Chief Information Officer of GE, it was a move that he was aware of well in advance. A hallmark of GE’s legendary talent management program is to have leaders identify people who could take their places in advance of the need for that transition. Jamie Miller, who had been CIO for two and a half years prior had identified Fowler - then CIO of GE Capital – as her possible successor. As Miller ascended to the role of President & CEO of GE Transportation, Fowler had been preparing for this move. In turn, in his first six months in his current role, he will be planning who might succeed him, even though he has no plans to leave the role any time soon.

In this interview, Fowler describes how he has organized himself in the early stages of his role. He already has developed audacious goals of driving $1 billion in productivity gains by 2020 while also generating $15 billion in revenue growth from software and technology. At the heart of this is Predix, an analytics platform to help assets run more effectively. GE is using it internally, and has already garnered $5.5 billion in revenue gains by making it available to GE’s customers. All the while, Fowler has developed a well thought out plan to keep GE’s information secure. He talks about all of the above and more in the following interview.

(To listen to an unabridged audio version of this interview, please visit this link. This is the 32nd article in the CIO’s First 100 Days series. To read past interviews with the CIOs of P&G, Kaiser Permanente, Microsoft, CVS Caremark, and Ecolab, among many others, please click this link. To read future articles in the series, please click the “Follow” link above.)

Peter High: In our last conversation, a number of months back, you were the Chief Information Officer of GE Capital, a unit that has since been sold off, and you have taken over the role of global CIO for all of General Electric. I wonder if you could reflect on the transition, how you found out about the new role, how you began to prepare to the ascension to the role, and how the news of the role came to you.

Jim Fowler: The role came about as a series of leadership succession movements were planned in the company. Those successions, based on a few retirements, led to the previous group's CIO, Jamie Miller, taking on the CEO role of our Transportation business. That planning started to happen over the summer as some of the retirements came to be known. I think I found out about it around mid-July. The plan was to have me step in as the group CIO later in the year. I had thirty days’ notice before the formal announcements went out to start to think through what I had to do to prepare for the role and to lay out a plan.

GE CIO Jim Fowler

I used that thirty days to spend some time with Jamie, understanding what her thoughts were as I transitioned into the role, what things she felt needed to be continued or changed, and get her feedback on what it had taken her to be successful in the role. I also used the opportunity for myself to reflect on my experiences in the company and where I thought the company was headed relative to digital products, what we were doing related to growing the company in new areas, and how that was going to relate to the priorities for the IT function. So, that let me lay out a ninety day plan. I am coming to the end of that ninety days having worked through a lot of the steps in the plan.

High: Can you describe your purview as CIO of GE?

Fowler: We are a company that is in the midst of one of the largest transformations in our history. We are a 130 year old company. We have, for the last fifteen to twenty years, been as much a financial services company as we were an industrial company, and made the strategic decision last year to start to change and focus more on the industrial side. As we do that, running this large-scale company as a digital company is going to become more important. When I think about the role of CIO, the role has to be as much about being a great chief operating officer as it does being a technologist. You have to be able to understand the complete value chain of how we serve our customers externally and understand where those value points are - how we drive better service and costs for customers, how we improve our touch-times with customers. I think about my role when I am sitting with the executive team as one of an operating officer, where I am going to highlight my view of how those end-to-end processes connect, where the opportunities are to change the way we work, and how to serve our customers better.

When I measure myself, I measure what we have done as a function to drive growth from a revenue perspective, or what we have done to drive gross margin improvement, or how we are driving cash generation or improvement in the company. I think that has started to change the way that all the IT leaders in the company think about themselves - not just being technology leaders, but being business leaders who can see a better way to run the company going forward.

High: I would love to dive a little deeper into that. A lot of your peers as global CIOs of big companies do not necessarily get to the financial components so quickly. I know that your predecessor, Jamie Miller, was a financial expert, having been the chief accounting officer for the company, but I find it interesting that the more traditional CIOs also have a great cognizance of financials. If you are going to think about yourself as a chief operating officer, it is a set of capabilities that are essential. Can you talk about the way in which you, and peers of yours, develop the financial acumen to be able to speak with those people who have a deeper financial background?

Fowler: In my career, I have worked at every GE business with the exception of GE Healthcare. As I worked in each of those businesses, I served in different roles. I was a CIO of Supply Chain, I was a CIO that was responsible for all of our HR systems in the company. I had an IT role, early in my career, related to running the infrastructure. I have done other roles where I had commercial operations IT based roles with CRM tools. One of the things that you start to learn, as you move across business and functions, is that everyone is trying to figure out how to make the company more profitable. How do you help serve a customer better? When I was in supply chain, what I quickly realized was that my job was to supply visibility to inventory. Being able to hit on-time delivery from a customer perspective was important. Being able to manage inventory related to cash was important. Cycle times to reduce cost was important. I learned quickly that was what the Supply Chain leader cared about. That was what they were graded on, and I was there to support them.

The same happened when I was in the HR and commercial roles. I learned quickly that, as a functional leader, I am here to serve the business. I am here to be their support. What I have always found, in every one of those roles, was that the more I could tie what I was doing to an outcome they cared about, the better I did and the more successful I was. When you start to learn what they care about, 99 percent of the time, it goes back to a financial, a quality, or a customer metric. It is through that evolution of roles that I learned that my success was measured by the success of the business partner that I was supporting.

High: You mentioned the fact that Digital is becoming an increasingly important topic in GE, as it is in other organizations as well. I know that you have been thinking a lot about the implementation of the industrial internet, as a significant component of that. Can you talk about your vision for that and what it entails?

Fowler: If you step back and think about the industrial world, there is a huge untapped amount of data on the operations side of the house that is ripe for helping companies be more productive. As we are talking to our customers, our goal is to figure out how we can combine great information technology with the machines - the physical world of machines in the world today - to provide new outcomes to our customers. As I said in my role that the better I can drive outcomes for my business partners, the more successful I am, we recognize as a company that the better we can help our customers use their assets more profitably the more successful they are and hence the more successful we are as a business partner or supplier to that customer.

Our strategy around the digital and industrial is this recognition that machines are going to be more connected than ever. Those machines are generating data at exponentially greater rates than humans are, in human cloud environments, like you would for an online retail organization, as one example. Companies that can figure out a way to combine all that data and information off of that hardware with how they run their companies are going to be more profitable. Bringing that back inside GE, how I think about that inside the company, as the IT leader, is that I need to make GE the best example of a digital industrial company in the world. How can I take information that is coming off of equipment in our four hundred manufacturing facilities around the world and use that to make those plants more productive?

For example, we have been working on one of our legacy businesses, the lighting business, where we have been implementing technology within their Hendersonville plant. We are taking lead times from twenty five days to ten days, and 95 percent improvement in on-time delivery within that plant, all by taking the information coming off the hardware and building some fairly sophisticated models that help us predict what is going to happen within that plant, based on forecasts and loads. We are able to streamline the way product goes through that plant.

Another example is how I help our services business do better predictive maintenance at an asset to improve the overall up-time. Within our services business, we have implemented some condition based maintenance software that combines all of our IT (our operations records and information about the equipment) with OT (the information coming off the locomotive) to drive forty million dollars in bearable cost productivity by being able to maintain and replace parts, that we know from a condition perspective, not a time perspective, are going to fail. My strategy is all around how I take all this great work we have done in IT in silos and combine it with machine data in ways that are going to drive outcomes for the company. I have a big target. I have $1 billion in productivity inside the company that I need to drive, between now and 2020, that is all predicated on the ability to do what I just talked about.

High: Ambitious goals. You have also alluded to Predix, a cloud software platform for the industrial internet. Can you talk about the vision for that?

Fowler: The idea behind Predix is that machine data is different from anything else we have seen. If you go to a typical cloud provider today, it is all based on the idea of a central model of data. We ingest all of the transactional data from my family, this past weekend shopping online, and we use it to predict what products and services I may be interested in going forward. That is the simple example.I am a family of five, we probably did twenty transactions last weekend, and being able to track and store those centrally, and be able to report off of them and drive analytics off of them is pretty easy.

Now imagine that you have five thousand aircraft engines all generating a terabyte of data per flight per day. All of a sudden, the volume of transactions is hundreds of millions of times greater, per unit or per asset, than what you have seen in this traditional cloud-based world. Predix is built to deal with that scale. It recognizes that you need a distributed cloud, and that there are elements of it that will sit centrally but there are elements that are going to be distributed at the asset level. It is going to have to deal with both a connected and a disconnected universe. At the end of the day, it is able to take an analytics base to be able to make an asset run better.

This Predix platform is what we are doing one hundred percent of our internal application development on. We are developing product, not just for use inside GE, but for use by our customers. We have already signed several partners who are also starting to build applications that will run on top of that platform. Pitney Bowes is one example. They are using this platform to develop software that will help them optimize how their equipment is used against their customer base. It is a key strategy for us going forward and a big part of where we think the growth of the company is going to come from.

High: The prediction there is $15 billion in revenue by 2020, correct?

Fowler: We will grow software and technology to be $15 billion in total between now and 2020. We are about $5.5 billion today, so we have $10 billion of growth before 2020 to come out of the software as a service and the platform space.

High: One of the things I have always found fascinating, in speaking with leaders from across General Electric, is how seriously career planning and succession planning is taken. You talked about the time you were able to spend with Jamie Miller before she left the role and you ascended to your current role. Can you talk a bit about the advantages of understanding multiple areas of GE before coming into this role? I would also love to understand, philosophically and culturally, how the organization operates in ensuring that leaders not only have depth in some of the functional areas that they are responsible for, but breadth across the organization as well.

Fowler: Within each one of the units that I have worked I have held different jobs - Supply Chain in one role, CIO of a business in another, and CTO of Infrastructure. I have gotten these broad roles that have allowed me to go deep into technology, where I could become the subject matter expert, or an expert in an area of technology, or an area of the platforms that we support while learning different business models. I started off in our Aviation business, and came into the company from the outside as a systems administrator doing UNIX administration and Windows NT administration. That provided me the opportunity to learn about the aviation business as well as go deep within my trade.

One of the things that you will find in our structure is that we view it as everyone's job to teach the people that work for them how to do what they do, so that they can go do something else. That is a measure of success. One of the things that you will not find in our culture are people who want to hoard their knowledge or information because they feel that is their power and will keep them in their role. It is quite the opposite. People view it as their job to teach the next generation so that they can move on to the next thing. If you can have that culture, it is opening, but what that leads to is then every job change becomes about what your deficiency is. When I left Aviation, from that first job, and I came to corporate, I needed a big ERP experience. They gave me the opportunity to run our global human resources system, which runs on an Oracle platform. I was able to continue to build off of my skills knowing technology. I got to go deep into ERP and learn another function. I was able to check off a deficiency in that box. When I finished that job and started to look at other gaps I had, I had not ever had a product facing role, so the next job I was moved into had me working in Supply Chain, where I worked with product that went out the door every day. I saw what it took to make product. I saw the process around product.

That is what is embedded in our culture. The company is as much a training ground, and as much an executive MBA program, as it is a large conglomerate. That is how they run the leadership of the program. We want to move people around into different roles to challenge them. Coming into this job, the benefit that has given me is that I know the way that the company runs. Having seen all these businesses, I know where they are different, and I know where they are not. In my role, knowing where they are not different now is helping me accelerate on where to centralize certain functions, versus what functions and technologies and IT areas need to remain close to the individual business and at the edge of the organization. That is all because we built this model that identifies the next job based on what gaps you have and what you need to build from a career perspective.

High: How early into your current role will you start to think about the person who can succeed you? Is that something you have already begun to think about?

Fowler: It happens in the first sixty days. One of the things that we maintain, at all levels of the organization, is an extremely robust succession plan. It is part of our planning tools. We literally go in and list out two to three people that we think can fill not only our job, but every one of our direct reports' jobs, and what we think the timing of the person getting into that role is. I have actually already filled it out for my staff. We have some idea of who up and coming leaders are who we need to groom to be ready to fill roles at certain times. More importantly, should we have an unfortunate event, like someone leaving unexpectedly, we can react quickly.

You talked to me last when I was in our Capital business. Taking that job was somewhat of a surprise. The CIO of that business decided to leave for an external opportunity. The first thing they did was pull up the succession plan. My name was on that succession plan, and it caused me to get a call that said, "We need you to step up and take this role." It was not on the timing that was expected, but the timing was in place, and it allowed them to announce a replacement at the same time that they announced that the person was leaving. That is a hallmark of how we do succession planning across the company.

High: How have your organized your time in the couple of months that you have been in role so far?

Fowler: It is kind of silly, but for the last five years I have looked at a book calledThe First 90 Days. It lays it out well. It gives you some guidelines on how to lay it out. I re-open that book every time I start a new job. I will tell you what that looks like for me. The first thirty days is all about listening. Do not make any decisions. Go meet with as many of your team, at multiple levels of the organization and at multiple skip-levels. Spend a lot of time with your business partners. I spent time with everybody from our CEO Jeff Immelt, our digital leader Bill Ruh, to each of the CEOs of each of the individual GE businesses to get their feedback on the function and to hear what was important to them. I used that first thirty days to identify critical initiatives and critical early wins that I wanted to make sure I deliver to help me gain credibility in the role. I think it is always important to know what is important, but also show that you are listening and have some critical early wins in order to gain credibility with the team at large.

Once you have done that, the next thirty days is starting to lay out what the imperatives are, and start to socialize that. I have already got a list of what I think the six priorities for the function are. I have presented it to most of the business leaders, and have honed it and modified it as I have gotten feedback. The last thirty days is about getting the mechanisms in place. I have already announced what my organizational structure is going to be. We have already made the appropriate changes to get that in place. We have laid out an action plan for next year to achieve goals and objectives. We set clear targets, both financial and critical-metrics that we need to drive into next year. We are now at the point, in the last half of the ninety days, where we are pushing that and communicating it to make sure that everybody is clear that what they are doing relating back to those roles. That is my approach. That is what I go through usually in the first ninety days of a job.

High: You spoke about the structuring of your first ninety days in a variety of different roles. Can you talk a bit about some of the tactical actions that you take in the early stages of your tenure?

Fowler: The first thing that I think every CIO has to do is make sure that they have operations right. Step one for me is making sure that we have the right incident management, processes, and the operations processes in place to make sure that we continue to maintain stable operations. The biggest de-railer for somebody in my role is having operations go off the rails. I start there.

The second one is making sure that we are thinking about cyber-security well. I just spent an hour and a half with our board of directors last week, briefing them about the actions that we are taking to protect our intellectual property. There is not a CIO alive who I do not think understands the importance of making sure that you have secure infrastructure, and that you are protecting data. You are constantly trying to stay ahead of that curve. For me, those are the two tactical items where, if they go off the rails, none of the rest of what I am working on is going to matter. That is always where I start when I go into a job.

High: Security is such an important aspect and growing in complexity for companies and Chief Information Officers. GE is one of the legendary companies when it comes to innovation, a topic on the minds of many executives. How do you think about the balance between risk-taking and risk mitigation?

Fowler: A question I get from the board, quite often, is how I know when enough is enough. This is a space where you could spend endlessly on different areas of technology. The way I answer that question is that you have to be able to stratify your data. Across the company, we have categorized our data into three categories. There is a category we call the "crown jewels." This is a set of data that we felt, if lost, would provide a huge competitive disadvantage to the company. It is our secret sauce in how a lot of our products are made. That gets a certain amount of spending and focus and protection based on what we think the losses of the company could be.

The second is the "critical business information." Our critical business information we lay out as another layer. It would not have as high a cost and high penalty if that information was lost or if that type of exposure happened, but it is significant, and it would be significant to the stock price.

Our third category is general business information. By having that stratification it has allowed us to answer the question on when we are spending enough. We base it back on what we think the financial impact could be to each one of those. By stratifying the data, I do not have to spend the same amount of money to protect all data, but I am protecting the data based on the level of loss that we think we could have. That has resonated with folks, and helped them get their arms around it. It helps us understand, frankly, what the real risk is to the company, financially, from a reputation perspective, and from a bottom line perspective.

The other way that we have been doing this is by talking about the layers of the fence. There is not one silver bullet to cyber-security, and so we have broken it down into four categories at the fence. What we are doing to protect the environment? What are we doing to detect when we do have a breach? What are we doing to respond when an event occurs? What are we doing to remediate when an event happens? Overlying all of that is a governance structure to make sure that it is being governed across the company and all the business units in exactly the same way. By having that model, along with the understanding of the value and risk associated with the data, it becomes a much easier conversation on why and where we are spending money.